Radical changes to NSW contaminated land laws

By Nick Thomas.

Key Points:
The changes would broaden the EPA's powers to order investigation and remediation of land, and would expand significantly the duty to report contamination to the EPA.

The NSW Government is proposing radical changes to the Contaminated Land Management Act 1997 (CLM Act). If you currently own, occupy, or have impacts on land which could potentially be contaminated, or you ever have done in the past, or are proposing to do so in future, you will need to review your obligations and exposure to investigate or clean up the land or to report it to the EPA.

The Contaminated Land Management Amendment Bill 2008 is currently before Parliament. Its key changes are outlined below.

New contamination threshold for EPA powers

The threshold for activation of EPA powers would no longer be contamination which presents a "significant risk of harm", but instead would be contamination which the EPA considers is "significant enough to warrant regulation".

The factors which the EPA must consider in relation to the existing and the proposed new threshold are similar. However, the change in the description of the threshold indicates that the EPA will have greater discretion in determining whether to exercise its statutory powers in relation to contaminated land than it does now.

In practical terms, the new threshold will make it more difficult to determine in advance whether the EPA will intervene for a particular site, and this could make contractual risk allocation more challenging.

Preliminary investigation orders

The EPA would be able to order a person from a specified class of persons to carry out "preliminary investigation" of a site to determine whether the site is contaminated with the substances specified in the order.

This power to issue a preliminary investigation order is substantially broader than the power to issue an investigation or remediation order under the current CLM Act. For example:

• The power would not be subject to any particular contamination threshold - the only requirement is that the EPA reasonably suspect that the land is contaminated with the substance which it requires the person to investigate.
• The list of persons to whom a preliminary investigation order could be issued would be very broad - it would include, for example, a person who carried out activities on land which generate or consume the substances which the EPA suspects are currently contaminating the land (even if there is no evidence that the person actually caused any contamination).
• There would be no hierarchy of persons to whom the EPA could issue an order - it could select from any person in the list of eligible persons.

Less stringent criteria for "person responsible"

The first class of person in line to be issued with an EPA investigation or remediation order would no longer need to be "principally responsible" for contamination which presents a "significant risk of harm". Instead, any person who is merely "responsible" for "significant contamination" could be issued with an order.

In addition, the definition of who is "responsible" for contamination would be broadened considerably. For example, a person would be "responsible" for contamination if the person:

• owns or occupies the land, knew "or ought reasonably to have known" that contamination would occur, and failed to take reasonable steps to prevent it; or
• carried on activities on the land which generate or consume the same substances as those which caused the contamination or substances which may be converted into those substances, "unless it is established that the contamination was not caused by the person". So we have a reversal of the onus of proof here.

Broader duty to notify, and a responsibility to investigate?

The duty to notify in section 60 of the CLM Act would be broadened considerably.

The persons who would have a duty to notify would still be a person whose activities have contaminated land to a prescribed extent and the owner of land which has been contaminated to a prescribed extent. However, the trigger for the duty to report would no longer be "actual" awareness - instead, "constructive" awareness, which would be based on what the person "ought to have" known, will suffice.

Moreover, the matters which must be considered in determining whether a person "ought to have known" include:

• the person's abilities, including his or her experience, qualifications and training;
• whether the person could reasonably have sought relevant advice; and
• the "circumstances of the contamination".

These changes could have the practical effect of imposing a higher duty on persons with more resources, or perhaps in-house expertise, to actively investigate the potential for contamination, for the purpose of notifying the EPA about it.

Tougher offence provisions for directors and managers

The Amendment Bill will remove the "no knowledge" defence for directors and mangers of a corporation which commits an offence. They may be deemed to have committed the same offence as their corporation even if they had no knowledge of the circumstances of the contravention, unless they establish one of two other defences (ie. no control or exercising due diligence).

This change would bring the CLM Act into line with other environmental laws, but it is a particularly important change in light of the proposal to broaden the duty to report contamination

Simplified process for investigation and remediation orders

The current system of investigation declarations, investigation orders, remediation site declarations and remediation orders would be simplified. The Amendment Bill proposes instead a regime of declaring land to be "regulated land" and issuing "management orders" which may cover investigation and/or remediation.

This simplified process seems to me to be a very sensible amendment.

Some implications

The proposed amendments will broaden the net of persons who may be required to take responsibility for reporting, investigating or cleaning up contamination, and increase the risk of these persons having such a responsibility.

All stakeholders in land will need to be more vigilant in considering whether land is or might be contaminated, and more careful in allocating the risks of contamination contractually.

For further information, please contact Nick Thomas.